By Pat Stacey
Bank of America recently announced plans to charge a fee for debit card transactions beginning in January. The fee introduction is a response to the Durbin amendment to the Dodd-Frank financial reform bill passed by Congress and signed by the President. The bill puts a cap on how much banks can charge for debit cards fees on everyday transactions.
You and I don't see them but retailers are charged a small percent of all debit card transactions – that's where the revenue is coming from now. This fee, while a small percentage is worth about one billion dollars to banks annually and now what retailers will save, will be passed on to customers of Bank of America and most likely many other banks as well.
This is a classic example of Congress, relying on the Federal Reserve, pushing the pendulum all the way back to the other side as opposed to somewhere in the middle. Banks take the position that they need the revenue because they absorb huge amounts in fraudulent purchases relieving customers of responsibility. It seems to me to be a pretty good system and one that has worked for decades, now the way we use debit cards may be forever changed.
It is too large a move by Congress and it ultimately penalizes the consumer. So we may all be subject to returning to the lost art of writing checks. Watch for other banks to follow the Bank of America lead as a result of this over-reaching policy.